170 Lex ET Scientia. Economics Series
LESIJ NO. XIX, VOL. 1/2012
EU COMPARISON OF VAT
Maria Zenovia GRIGORE ∗
VAT is one of the newest tools of the global economy and is widely adopted in most of the
countries. For EU Member States is required not only the existence of VAT, but also that its main
characteristics to be uniformly implemented. This should facilitate intra-Community transactions,
but in practice does not as there are many local variations which can lead to costly errors and
penalties. The objective of this paper is to collate data about the main characteristics of VAT in EU
Member States and to highlight the key differences between them. This survey shows that there
continue to be opportunities and risks for businesses trading cross border, as a result of differences
in application of Community legislation on VAT. This led to the necessity of VAT reform. On this
basis, the Commission adopted on the end of the last year a Communication on the future of VAT.
This sets out the fundamental characteristics that must underlie the new VAT regime, and priority
actions needed to create a simpler, more efficient and more robust VAT system in the EU.
Keywords: VAT standard rate, VAT registration threshold, distance selling, VAT recovery,
principle of destination.
Fiscal policies represent an important lever for the support of a sustainable economic growth
and for public finances consolidation. It is important that the European fiscal system becomes
effective, efficient and correct, especially regarding the VAT European system given the fact that at
present, the VAT constitutes one of the main sources of revenues for the Member States budgets.
One of the conditions to accede to the EU is that the main characteristics and rules regarding
VAT be uniformly implemented. The objective of this request is to simplify the taxation of intra-
community transactions, but in practice this thing is not possible because of different local VAT
regulations and foreign languages assessing the compliance of some operations. In the first part of the
work, we shall emphasize these differences which are especially related to the level of VAT rates,
thresholds of VAT and foreign companies VAT recovery.
In the second part of the work, we shall analyze the recent initiatives of European
Commission regarding the creation of a more efficient, stronger and simpler VAT system. This
system should reduce the operational costs for companies and administrative charges of authorities,
fighting at the same time against fraud which represents a considerable burden for public finances
and for consumers.
∗ Associate Professor, Ph.D., Faculty of Economic Sciences, “Nicolae Titulescu” University, Bucharest,
Romania, (e-mail: firstname.lastname@example.org).
∗∗ Senior Lecturer, Ph.D. candidate, Faculty of Economic Sciences, “Nicolae Titulescu” University, B ucharest,
Romania, (e-mail: email@example.com).